US company sues Quebec over fracking ban

U.S. mining company Lone Pine Resources Inc. is taking legal action against the government of Quebec for violating free trade rules by revoking fracking operation permits, following a ban that the Canadian province imposed in June 2011, the Huffington Post has reported.

Delaware-based Lone Pine Resources filed a claim seeking $250 million in compensation, stating that it had spent millions of dollars in the five-year process to obtain a permit to extract energy through fracking in Quebec.

In its complaint, the company accuses the province of Quebec of breaching chapter 11 of the North American Free Trade Agreement (NAFTA), including Article 1105, which states that Canada has to treat U.S. investors in accordance with certain protection clauses. In addition, the company claimed that the government introduced the ban, known as Bill 18, without any prior consultation or notice.

Lone Pine Resources first notified the Canadian government of its plans to sue in 2012 but it formally filed the complaint only recently. In addition to the $250 million in damages, the company also wants Canada to cover the full costs associated with any arbitration proceedings, including all professional and legal fees, the Huffington Post said.

Various campaign groups both in the United States and Canada have called for Lone Pine to drop its suit because they fear this may start a wave of lawsuits and could interfere with the rights and responsibilities of governments to protect the environment.